Massive budget surplus proves deep cuts were unnecessary

EDMONTON - News that the Alberta government is sitting on yet another massive budget surplus proves that Premier Ralph Klein and members of the ruling Conservative party greatly exaggerated the extent of the Alberta's "debt crisis," says the president of the Alberta Federation of Labour.

"During the elections of 1993 and 1997, the Tories whipped up fears that Alberta was about to hit a so-called debt wall. They used these fears to sell voters on a radical plan of budget cuts and public-sector down-sizing," says Audrey Cormack.

"But within one year of taking power, the Klein government was recording multi-million-dollar surpluses. In fact, if the surplus tops $1 billion this year as expected, the cumulative surplus for the past five years will be more than $8.3 billion. What this tells me is that the government could have balanced its books and paid off substantial portions of the province's debt without resorting to such deep cuts in areas like health care, education and municipal services."

Cormack says Albertans are still reeling from the massive and poorly planned cuts imposed by the Tories between 1993 and 1997 - and she firmly rejects the argument that the cuts were necessary to balance the books.

"If you look at the numbers, it's clear that cuts in government services played only a secondary role in building the surplus. The lion's share of the government's current wealth has come from increased resource royalties and increased tax revenue generated by the growing economy," says Cormack. "Premier Klein and Stockwell Day like to take all the credit, but the truth is that, to a large extent, the deficits of the early 90s and the surpluses of recent years were both a product of the business cycle. As a result, the deficit would have disappeared even if nothing had been done to reduce spending levels."

Cormack say the big danger now is that the government will use the huge surplus as an excuse to move ahead even more quickly with its plans for sweeping tax cuts - contrary to the wishes of most Albertans and even many people in the business community.

"Albertans want the surplus spent on things like education, health care and fixing our crumbling infrastructure," she says. "That message has come across loud and clear in opinion polls and in public forums like the Growth Summit. Even business leaders have agreed that re-investment in people, services and infrastructure should be a higher priority than tax cuts."

Cormack says the government's plan for a flat provincial income tax is particularly dangerous. She says it would provide disproportionate advantages to the wealthy and rob the government of billions of dollars in revenue it needs to fund core public services.

The flat tax plan is so obviously flawed, that it was almost unanimously p anned by business, municipal and labour leaders attending last Fall's Alberta Congress Board conference, she adds.

"Alberta is clearly still a wealthy province," says Cormack. "But the government seems intent on using its huge surpluses as an excuse to keep our public services impoverished. What Alberta needs is more investment in core services like education and health care - not tax cuts that benefit the wealthy."